What Awaits Colgate (CL) In Q2 Earnings: Boom Or Bust?

Colgate-Palmolive Co. (NYSE:CL) , a global dealer in consumer goods, is scheduled to report second-quarter 2016 results on Jul 29. In the last quarter, the company delivered in line earnings.

The company has a robust track record of either matching or outperforming our estimates. Colgate has delivered in line results in two of the trailing four quarters and outperformed estimates in one. However, the company has an average negative earnings surprise of 0.01% in the past four quarters. Let’s see how things are shaping up for this announcement.

Factors Influencing This Quarter

New York City-based Colgate-Palmolive’s performance in the preceding quarter reflects its strength and leading market position. The company derives strength from its international brand recognition and innovative strategies. We believe that its continued focus on product innovation, along with globally recognized brands and presence in both developed and emerging economies, enables it to capture growth opportunities and boost profitability. Colgate anticipates robust organic sales growth in 2016, backed by new products across categories and geographical regions, which should translate into double-digit organic earnings per share growth.

However, the company continues to battle macroeconomic headwinds in various countries and lingering currency woes. Foreign currency exchange hurt the company’s revenue growth by 8% in first-quarter 2016 and is expected to have a negative effect on 2016 sales as well. Also, stiff competition remains a threat. Together, these factors make us slightly cautious of the upcoming results.

Earnings Whispers

Our proven model does not conclusively project Colgate as likely to beat estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. However, this is not the case here due to the following factors:

Zacks ESP: Earnings ESP for Colgate is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 69 cents.

Zacks Rank: Colgate carries a Zacks Rank #3 (Hold) which increases the predictive power of the ESP. However, a 0.00% ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Bloomin' Brands Inc. (NASDAQ:BLMN) , scheduled to report earnings on Jul 29, has an Earnings ESP of +3.33% and a Zacks Rank #3.

Papa John's International Inc. (NASDAQ:PZZA) , expected to report earnings on Aug 2, has an Earnings ESP of +3.70% and a Zacks Rank #2 (Buy).

Jack in the Box Inc. (NASDAQ:JACK) , expected to report earnings on Aug 3, has an Earnings ESP of +1.15% and a Zacks Rank #2 (Buy).